Doak v Rollander [2016] NZHC 1741 (29 July 2016)

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UNDER	Part 18 of the High Court Rules 2008
IN THE MATTER	of the Declaratory Judgments Act 1908
BETWEEN	WILLIAM NEVILLE DOAK First Plaintiff
AND	CHILDRENʼS HEALTH CAMPS - THE NEW ZEALAND FOUNDATION FOR CHILD AND FAMILY HEALTH AND DEVELOPMENT KNOWN AS STAND CHILDRENʼS SERVICES Second Plaintiff
AND	BRETT DAVIS ROLLANDER, KIRSTY- ANNE ROLLANDER AND VAREENA STEVENS AND JILL BURKE, RICHARD BURKE AND MONICA YOUNG First Defendants
AND	PATRICIA KAY HUFF Second Defendant
AND	STEPHEN JOHN MACKLIN AND ADELE MARGARET MACKLIN Third Defendants
AND	ROBERT HAROLD WYLIE WAKELIN, JOANNE ISABELL WAKELIN AND BURROWES TRUSTEE SERVICES (2013) LIMITED Fourth Defendants
AND	NEIL TREVOR TURNER, JEAN ELIZABETH TURNER AND KAPITI TRUST COMPANY LIMITED Fifth Defendants
AND	CHRISTOPHER JOHN LAMAIN AND CAROL ANN LAMAIN _{Sixth Defendants}

AND CAROL LILLIAN WEBSTER, STUART GORDON WEBSTER AND HERCUS KING TRUSTEES LIMITED

Hearing:	14 July 2016
Counsel:	P S J Withnall and S P R Conway for Plaintiffs J W Maasen/M W G Riordan for First, Third, Sixth and Seventh Defendants D G Randal and A E OʼConnor for Kapiti Coast District Council
_Judgment:	_{29 July 2016}

[1] The first plaintiff owns land in Paraparaumu (the site). The site is part of a large subdivision that was created in 2001. The site, as with most or all of the sections in the subdivision, is subject to a restrictive covenant concerning the use to which it may be put. The restrictive covenant in issue provides that buildings on the site may not be used for an industrial or commercial use.

[2] The second plaintiff wishes to purchase the site. Together the intending vendor and purchaser seek a declaration that the second plaintiff ’s intended use of the property as a home providing short term residential living for children who have had harmful experiences does not breach the covenant. The agreed issue is whether it would constitute “commercial use”.

[3] The defendants are the seven immediate neighbours. Of these, the fourth defendants have indicated they abide, and the second and fifth have taken no part. The other four defendants oppose.

[4] The same covenant affects 150 properties. The remaining 143 properties were served but none have taken a role other than the Kapiti Coast District Council which owns 11 of the properties. It abides the decision as it affects the interpretation of the covenant, but appears to preserve the position of the District Plan.

[5] The second plaintiff (Stand) is a registered charity that provides services for needy children. Stand is the trading name for an entity formally known as “Children’s Health Camps – the New Zealand Foundation for Child and Family Health and Development”. This charitable trust was established by the Children’s Health Camps Board Dissolution Act 1999. The new name of Stand Children Services Te Maia Whanau was adopted in 2013 consequent upon a decision to move away from the health camp description.

[6] The site would have children for 11 months of the year, there being a four week shut down over the Christmas/New Year period. It is anticipated there would be nine intakes a year, each lasting 35 days. Not all children of a particular intake will necessarily be there for the whole five week period. There would be some weekends between intakes, and also two training weeks per year, when no children are present.

[7] Whilst attending the facility, the children would live and sleep on site and be supervised at all times. However, no staff would sleep on-site – there would be night staff but they would be on active duty as opposed to sleeping on-site.

[8] The following extract from the evidence of Dr Anne Inkpen, the Chief Executive of Stand, provides a sufficient overview of what would be involved with the children’s stay:

40. Activities are focused on supporting and enabling children to grow and develop by providing them with an experience of a physically, emotionally and psychologically safe environment. This helps the children respond differently to their environment and develop trust in adults, other children and the future. Children are given appropriate challenges and experiences, so that they can engage creatively and confidently with life’s challenges and opportunities. Many children have a goal of becoming as independent as possible,

so they can make positive choices and choose their own responses. Mastering new skills helps increase self-confidence and exploring inner thoughts and feelings in a safe environment helps develop self-awareness and control which can be transferred and support the development of more positive relationships with family, friends and the wider community. Overcoming barriers to learning is also a focus for many children so they are well prepared for the challenges of the classroom and playground and are able to navigate their way in a mainstream school setting.

41. The physical and emotional wellbeing of children, as well as the promotion of healthy lifestyles, are essential elements of the child’s stay and, as such, are incorporated into each child’s plan. To that end a range of programmes and therapies are available including Theraplay, the Circle of Courage programme and the Seasons for Growth programme as well as various activities centred around repairing/supporting the development of the children’s brains. These range from soothing activities which address challenges relating to the limbic brain, to learning activities focused on developing and frontal cortex and challenge activities for building confidence and learning safe risk taking.

42. Stand also provides a range of guidance and support services at the Children’s Villages, including the monitoring of medication and any health concerns that may arise. Diet and nutrition form a central role in developing healthy lifestyles and children learn about their importance, whilst also enjoying a wide range of healthy foods. At the same time a similarly wide range of fun and enjoyable activities are available to enhance breathing and relaxation, mindfulness, physical mastery, fitness, stamina and strength through exercise, sport and team projects.

43. At the Children’s Villages Stand provides children with a holistic learning experience that supports their overall development using normal family and household routines such as regular bedtimes and mealtimes, and age appropriate contributions to chores. We teach living skills, provide cultural, adventure and recreation based activities and create opportunities for learning arts, crafts, kapa haka, dance, music, gardening, animal care, nutrition, health and fitness, and learning how to value and take care of the environment.

[9] In terms of supervision, it is anticipated the maximum number of staff on site at any one time would be 17. However that occurs at the changing of shifts, and the more regular situation would be six to eight staff during weekdays, and two to four during weekends.

[10] The children or their families do not pay for the time spent at a Children’s Village. Stand has contracts with government departments which fund these services and that is their primary funding source. The staff are paid employees as opposed to volunteers.

[11] As for the site itself, it presently has a very large dwelling of 1120 m²on a

1.8 ha allotment. It is proposed to do major internal modifications. The defendants emphasise, among other aspects, the fact there would be a reception area, meeting room, and office space which together would occupy about 204 m².

No buildings may be constructed or used for commercial or industrial use unless such use is a predominant use under the code of ordinances of the Kapiti Coast District Council for such lot.

[13] The parties generally agree that the approach to be taken is that applicable to the interpretation of contracts. A point of difference between the parties is where the emphasis is to be placed. Stand focuses on what it says is the ordinary meaning of the word “commercial”, contending there is no need to move beyond that. The defendants emphasise the whole of cl 7 with its reference to district planning documents, and also say weight must be given to the purpose of all the restrictive covenants, of which cl 7 is but one. Principles of construction are available to support both propositions. It is as always a matter of interpreting the provision in light of its purpose.

[14] An issue identified, but which neither party wished particularly to resolve, is the extent to which extrinsic evidence can be considered, given the restrictive covenant is on a public register. There are decisions of high standing that suggest public documents must be construed having regard only to the document itself, since

_{that is what people will have seen and considered.}¹_{The matter has been left open in}

¹Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] UKPC 19, [2003] 3 NZLR 740 (PC) and

Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45, (2007) 239 ALR 75.

New Zealand, and since extrinsic evidence is not pivotal here, it is unnecessary to consider it further.²

[15] The following extract from the Laws of New Zealand provides a helpful summary:³

An easement is to be determined by reference to the instrument creating the easement, and weight is to be given to plain wording where possible. Where necessary, the circumstances of its creation, including contemporary documents indicating intention, and the factual matrix at the time of creation, may be taken into account; it is not the case that registration means extrinsic material must be ignored. Similarly, restrictive covenants have been interpreted by reference to the circumstances relating to the background of the relevant covenant. The purpose of a covenant will often be determinative of its meaning.

[16] The subdivision in 1999 was substantial involving more than 150 lots. Each lot was subject to a similar set of covenants which were plainly intended to maintain the character and quality of the overall subdivision:

(b) clause 2 concerned the design and materials for garages; (c) clause 3 prohibited relocatable houses;

(d) clauses 4 – 6 dealt with visiting tradespeople engaged in construction, and required removal of debris, and keeping vacant lots tidy;

²_{Big River Paradise Ltd v Congreve [2008] NZCA 78,
[2008] 2 NZLR 402 at [16]–[23].}

(g) clause 9 prevented further subdivision for a 10 year period; (h) clause 10 dealt with height restrictions;

(k) clause 13 required the building of a dwelling within six months of settlement.

[17] Most of these covenants are inherently limited in time since they deal with the initial building of a house. They are designed to ensure housing of a particular look and value is established, and that momentum for the building of houses is maintained. The first building on a site, if done in compliance with these covenants, will be a dwelling and its construction will expend the effect of all but cls 7, 9 and

12. Even then cl 9 carries its own time limit of 10 years and cl 12, though not expressly linked to this, probably had in mind the signs of tradespeople working on the dwellings.

[18] The role of cl 7 in all this is not easy to discern. Clause 13 requires the building of a dwelling on each lot within six months. The requirement to build a “dwelling” seems to rule out the possibility that the initial building could ever be erected for commercial or industrial use. So cl 7 seems to have two roles: to constrain use of a compliant dwelling once built, and to govern any further building that might be erected on the site. The size of some of the lots makes further building and commercial use a realistic option.

[19] The parties differed in their analysis of the structure of cl 7. Mr Withnall for the plaintiffs contended it should be viewed this way:

(a) first, is the use in issue commercial or industrial? If not, that is the end of it;

(b) second, if it is, is it a use authorised as a predominant use by the code or ordinances? It is only at this point one considers the local planning documents.

[20] By contrast Mr Maasen submitted the covenant should be read as a whole. The reference to the Kapiti Coast District Council code of ordinances is said to mean that the whole provision (including the terms industrial and commercial use) is to be interpreted having regard to the structure and terms of the applicable Kapiti Coast planning documents. The defendants thereby contend for a single inquiry which is:

no building may be used for commercial purposes unless such use is a permitted or controlled activity under the rules of the Kapiti Coast District Plan.

[21] This was a key theme of the defendants. It is in effect a submission that the word commercial is not to be given its ordinary meaning but it is a specialist term that takes its content from the way it used in planning schemes. It is convenient first to focus on this proposition rather than the more orthodox approach of beginning with the ordinary meaning.

[22] There are two ways in which the defendants’ case would benefit by incorporation of planning analysis – first, by reference to the various activities and uses that pull a matter into the District Plan term “commercial activity” and second, by reference to the proposition that if a use is only partly commercial then that use is nevertheless commercial for planning purposes. It is said that this means that if any of Stand’s use of the site is commercial it would breach the restrictive covenant.

(a) In its entirety it is a “commercial activity” for the purposes of the first part of clause 7 (and as defined in the District Plan) involving the delivery of bundled professional services to short term boarders pursuant to a service contract with the New Zealand government and

that activity is not permitted by the District Plan and therefore does not fall within the exemption in the second part of clause 7; or

(b) It is partly “commercial activity” involving the delivery of bundled professional services using office space and administrative facilities that are also commercial activity under the District Plan so that the first part of clause 7 is engaged and that commercial activity is not permitted by the District Plan and therefore does not fall within the exemption in the second part of clause 7; and/or

(c) The question is one of fact and degree unsuitable for a declaratory judgment and the Court has not been given the full information by the Plaintiffs to make a determination.

[24] There are several impediments to the proposition that the whole clause is to be interpreted by reference to planning documents. First, cl 7 would be a very awkward way to achieve this. The term “commercial use” does not have an exact equivalent in the planning documents, and if cl 7 were intended to engage the potentially broader concept of commercial activity, the drafters could have said so. Second, this absence of a clearer link to the now District Plan means that one has to read “commercial” in cl 7 not just as a word capturing a concept, but as a word that by its use incorporates a planning regime. That is placing too much weight on the somewhat obscure link to code of ordinances in the second part of cl 7.

[25] Third, much work is needed to give the second part of cl 7 this greater effect. As a starting point it was out of date even by the time the covenant was created. By then the Proposed District Plan was in force, meaning “predominant use” was no longer a relevant concept. This means an equivalent concept has to be found in the District Plan. Mr Maasen submits the functional equivalent is permitted and controlled activities, as both are as of right. That may be so but there is a case to say the equivalent may be limited to permitted activities.

[26] This matters because a controlled activity, but not a permitted activity, is “home occupation” which allows a portion of residential properties to be used for approved occupations. If predominant use can be equated to controlled activity, Mr Maasen then contends that one can look at what would thereby be allowed by cl 7, realise it is “home occupation” that is allowed, and thereby come to understand that the whole purpose of the covenant is to allow for home occupation use as permitted by the code of ordinance. This in turn shows commercial is to be read as

commercial activity as used in the planning documents, and the clause is to be interpreted by reference to these documents.

[27] Big River Paradise Ltd v Congreve involved the use of the term “subdivision” in a covenant.⁴An issue was whether the term should be given its ordinary meaning in light of the factual context existing at the time it was created, or the meaning found in the Resource Management Act. The Court observed:⁵

... The Resource Management Act defines “subdivision of land” for the specific purpose of identifying the types of subdivision which are subject to control under that Act. There is no obvious logic in applying that definition to “subdivision” when used in the restrictive covenant given the very different context.

[28] A similar approach is appropriate here. Commercial activity (a different term anyway from that in the covenant) has a meaning in the District Plan that is influenced by its role in the plan: there are interlocking provisions of which it is one. It is not necessarily an apt meaning for a term in a contract and clear words would be expected if that was the intention. The second part of cl 7 is not an example of clear words.

[29] The defendants’ approach is an example of working backwards from a preferred outcome. It also illustrates why courts have placed emphasis on beginning with the plain and natural meaning of a word, and only delving deeper if that meaning is ambiguous or appears to create unexpected situations. The restrictive covenant here is a relatively simple provision that can be analysed in a straightforward way exactly as the plaintiffs contend. Is the proposed use a commercial use? If not, that is the end of the inquiry. If so, it is prohibited unless it

can be shown it is a predominant use under the code of ordinances.⁶There is no

need to resort to the District Plan at all until one answers the first question in the affirmative.

⁶There is no doubt that predominant use would need to be updated using what has been termed the “mobile interpretation” approach – Big River Paradise Ltd v Congreve above n 2, at [25]-[28].

[30] It is important to word the question this way. As one delves into ordinary usage, dictionary definitions and context, all of which are obviously legitimate factors, sight can sometimes be lost of the real question. The task is not to define the scope of commercial but to determine if the proposed activity is prohibited by the covenant. I consider the answer is that what is proposed is clearly not a commercial use as that term is usually understood.

[31] Stand is a charitable trust that seeks to provide a temporary residential respite for children in need. During the short period they live at the site, Stand will seek to give the children some life skills and a good time. The children also need, to varying degrees, professional help, and that is provided. But primarily the use of the building will be to provide them with a temporary home. The children and their families are not charged for the assistance. It is paid for by the charitable trust. There is nothing commercial about all this.

[32] The defendants place emphasis on the following features which in combination are said to make the use commercial:

(b) the intensity of the use – 24 hours a day, seven days a week, 48 weeks a year;

(e) the nature of the services delivered by paid staff and skilled professionals;

[33] The general answer to these is that they seem directed at showing that the intended use will be different from an ordinary residential use of a dwelling. And that is plainly right. But that is not the requirement of the covenant. It does not say one can only use the building for normal residential accommodation purposes. Nor is the task to attach a single label to what the use will be – it has features that can be described as residential, recreational, social, educational and certainly charitable. The issue is whether it is a commercial use – and that seems the least likely of all the labels.

1. engaged in or concerned with commerce; 2. having profit as a primary aim rather than artistic etc.

That definition accords with ordinary use of the term commercial, and is inapt as a

[35] Looking at cl 7 within the role of the covenants as a whole, there is little in the overall structure that suggests commercial should be read other than in the normal way. As noted the primary purpose of the covenants is to control the initial development and the focus is very much on the first dwelling to be built on each site. Clause 7 then has an ongoing role, but only to the extent of preventing a building being used for industrial or commercial use as those terms are normally understood.

[36] The defendants placed considerable emphasis on the business structure of Stand, and the existence of contracts with the government that are its primary source of funding. The nature of an organisation is not irrelevant in that it provides a possible starting point for analysis of the intended activity, but the focus must then be on the actual use of the building. Further, if one is looking at the nature of the organisation as a relevant factor, I consider weight should be placed more on its charitable purposes than on the method by which it raises funds to carry out these purposes.

[37] The use of a fifth of the building, being over 200 m², for office and administration purposes is certainly a use of that part of the building that is not a residential use, and is not something normally associated with residential use. However, whilst office and administration use may be significant for planning purposes, it is not something that assists the defendant to establish commercial use in terms of the covenant. The administration is merely an adjunct of a non-commercial use and does not thereby change the character of that use. Nor is it an activity unique to commercial endeavour – most organisations, be they social, recreational or religious, have administrative and record keeping requirements. Many will have an office dedicated to the task. It does not make their activity or use of a building commercial.

[38] This observation also addresses the defendants’ submission that it is enough to engage the covenant if part of the use is commercial. In my view the part use being relied on by the defendants is not commercial either. I acknowledge the underlying issue of whether a partial commercial use would breach the covenant is a difficult question. It has to be resolved by a decision whether cl 7 is referring to the overall use of the building, or just any part of it. Both are available readings and there is little that assists with the answer. As the plaintiff observes the clause does not say “any part of the building” or “any commercial use” but that is just to observe that the clause could have been worded in a way that removed the issue. It was not so worded and it could be either.

[39] I prefer an interpretation that rejects the proposition that any commercial use would breach the code. I do so because it gives the restrictive covenant too much influence in circumstances where its purpose seems to be a broader one, namely to protect the overall character of the subdivision. I accept, however, that one could argue the permission contained in the second part of cl 7 represents the only commercial use that is at all permitted.

[40] In Douglas v Morgan the relevant term in the covenant was commercial activity.⁷The activity in issue was the running of a trucking business, and Katz J

_{noted many of the features to which the defendants refer here –
staff, scale of}

activity, and traffic movement amongst others. The key aspect though, as I see it, is that it was plainly a business – it was for profit and had all the normal attributes of such an enterprise.

[41] Relevant also to the issue of partly commercial, Katz J observed a commonsense approach was needed and that not all commercial activity, however minor, could constitute a breach.⁸Her Honour considered it important to assess in that case whether the activity impacted on the rural/residential character which the covenants were designed to protect. I agree that the context and purpose of the covenants are relevant to the interpretation but the task remains to assess the activity

against the ordinary meaning of the word, albeit with that meaning informed by the relevant context.

[42] In the present case, if some of what Stand proposes is commercial, which I do not accept, I do not consider it is to a degree that breaches the covenant. More fundamentally, however, for the reasons given it is not a commercial use of the building.

[43] The defendants submit that the information about the intended use is not detailed enough to allow the declaration sought. However, this is a submission premised of an approach to “commercial” that has not been accepted. The final footprint, as it were, in terms of intensity of use and alterations to the building will not alter the character of the enterprise. It can also be observed that the model described by Stand is not speculative. They run several such childrens’ villages. How it will operate is known.

[44] The plaintiffs are entitled to a declaration in the terms pleaded. The effect is to confirm that the intended use as pleaded is not a commercial use for the purposes

[45] On the information known to me, costs should follow the event on a 2B basis, together with reasonable disbursements to be fixed by the Registrar if necessary. The costs are payable jointly and severally by the first, third, sixth and seventh defendants. The Council is not liable for costs, and must carry its own. However, memoranda on costs may be filed if there is a need.

[46] It will be apparent from the terms of the judgment, but for the avoidance of doubt I record this judgment does not purport to address the concurrent resource

High Court of New Zealand Decisions

Doak v Rollander [2016] NZHC 1741 (29 July 2016)

High Court of New Zealand

Doak v Rollander [2016] NZHC 1741 (29 July 2016)